Oklahoma Trust Law

Friday, February 16, 2018

Here is a report on trust & estate
related legislation introduced in the current session.

1. SB1018 would enact the Oklahoma
Decanting Act. Drafted by a group of
Oklahoma attorneys who practice in the area of trust law, this act is modeled
on a similar statute in Texas, but modified to fit the particulars of Oklahoma
laws and jurisprudence regarding trusts – such as being protective of
beneficiaries. I participated in its
drafting. Sen. Julie Daniels is the
bill’s author. The bill has been
referred to the Senate Judiciary Committee.

2. SB1064 is part of the efforts of the
same group of Oklahoma attorneys. This
bill would require that the meaning and effect of the terms of a trust be
determined by the law of the jurisdiction designated in the terms of the trust
or by the law of the jurisdiction where the trust is administered in the
absence of a controlling designation in the terms of the trust. Sen. Daniels is the bill’s author. The bill is referred to the Senate Judiciary
Committee.

3. SB1505 is part of the efforts of the
same group of Oklahoma attorneys. This
bill would enact the Oklahoma Non-Judicial Transfer of Trust Act, allowing for
transfers of trusts to other jurisdictions under certain conditions and with
certain types of notice. Sen. Daniels is
the bill’s author. The bill is assigned
to the Senate Judiciary Committee.

4. SB1003 would enact the Uniform
Fiduciary Access to Digital Access Act.
I have not yet reviewed to determine (i) whether it incorporates the
revisions adopted by the Uniform Laws Commission when it approved the Revised Uniform Fiduciary Access to
Digital Access Act and (ii) whether it properly integrates with Oklahoma laws
regarding fiduciaries. When this
proposal was last introduced, it had some errors, including reference to the
wrong Oklahoma statutes governing guardians, because of other states’ use of
the term conservator to refer to a guardian of the property. This bill is assigned to the Senate Judiciary
Committee. Based on past experience, I
do not anticipate that this bill will survive the committee.

5. HB3534 would create a status-based
presumption of undue influence in cases of transfers to a caregiver with values
exceeding $20,000. Rep. Chad Caldwell is
the bill’s author. The bill is assigned
to the House Judiciary Committee.

6. SB1046, SB1135, and SB1322 would each
require background checks for guardians of minors, amending 30 O.S. 2-101. I have not reviewed them to determine how
they overlap. I suspect that one of
these bills will be passed and become law, given that whoever is pushing it has
reached out to three separate senators for sponsorship.

Sunday, October 1, 2017

Enjoying some academic pursuits during a weekend sandwiched between court appearances .... From the summary of substantive committee meetings for the upcoming ACTEC Fall 2017 conference:

States’ Varied Approaches to the Presumption of Undue Influence: With regard to undue influence, Oklahoma generally follows the approach now outlined in 2 Restatement (Third) of Property – Wills and Other Donative Transfers § 8.3 cmts. e-h (2003). This approach includes the presumption of undue influence upon a finding of (i) active assistance in securing the testamentary instrument by (ii) a per-son in a close and confidential relationship with the testator. Id. cmt. f. See also Blair v. Richardson, 2016 OK 96, 381 P.3d 717 (setting forth the Oklahoma Supreme Court’s most recent reiteration of the elements needed for the presumption of undue influence). In 2015, Oklahoma trust and estate litigators collectively held their breath after introduction of House Bill 1149, which would have (i) eliminated burden-shifting on issues of the validity of testamentary instruments and (ii) mandated strict en-forcement of in-terrorem clauses. The proposal was largely gutted by amendment as it made its way through the legislature, and was eventually vetoed by the governor. This turn of events gives rise the question that James C. Milton will address in this presentation: Whether and to what extent other states depart from the presumption of undue influence through legislation or common law.

Friday, September 29, 2017

"As a former trustee whose trustee status was revoked by Respondents, Zink was certainly affected by the administration of the Trust estate. Further, according to Zink, the land owned and managed by the Trust contains Zink's grandfather's grave site and residence, as well as other improvements. We fail to see how the trial court could conclude that Zink is not a person affected by the administration of the Trust. Zink has standing to bring his claims."

Sunday, September 24, 2017

... addressing the right to trial and summary judgment in probate proceedings.

"In the October 2013 issue of this journal, James C. Milton and Travis G. Cushman wrote that, 'without much fanfare,' in Shamblin v. Beasley, the Oklahoma Supreme Court 'identified a state constitutional right to trial in equitable actions.' This was an important pronouncement for attorneys handling matters in probate and other equitable proceedings."

Saturday, September 23, 2017

"As a former trustee whose trustee status was revoked by Respondents, Zink was certainly affected by the administration of the Trust estate. Further, according to Zink, the land owned and managed by the Trust contains Zink's grandfather's grave site and residence, as well as other improvements. We fail to see how the trial court could conclude that Zink is not a person affected by the administration of the Trust. Zink has standing to bring his claims."

Sunday, June 18, 2017

HB1243, signed by the governor in May, will amend Section 4-709 of the Oklahoma Guardianship and Conservatorship Act, which governs the investment of guardianship assets.

When originally enacted in 1923, Section 4-709’s precursor placed draconian limitations on types of investments. The ward’s assets could be invested in well-secured real estate mortgages, bonds, or the stock issued by building and loan associations.

In 1968, the statute was amended to allow banks and trust companies to invest guardianship assets under the prudent-man rule. Based on common law, this rule had its limitations. A fiduciary governed by the prudent-man rule could be held liable for losses in a single investment, even if the overall portfolio did well.

In 1995, the Legislature adopted the Uniform Prudent Investor Act, or UPIA, to replace the prudent-man rule. The UPIA uses a portfolio approach and favors diversification of investments. Section 4-709 was amended in 1995 to refer to the UPIA as the new standard for banks and trust companies investing guardianship assets.

Unless they retain a bank or trust company as agent, individual guardians are still governed by the 1923 investment rules – with only a few modest updates. That changes with HB 1243.

But rather than extending the UPIA to individual guardians, HB 1243 allows individual guardians to avoid the old 1923 investment rules by employing both a registered investment adviser representative and a certified financial planner. Under the rules governing their professions, both registered investment adviser representatives and certified financial planners owe their clients fiduciary duties. When investing guardianship assets, they will be required to ensure that the investments are in their clients’ best interests.

The new law will create some uncertainty for guardians. The ultimate investment decision appears to remain with the guardian. The new provision does not expressly require the guardian to follow the advice of investment professionals. In making investment decisions, it is unclear whether the guardian will be held to a standard of “prudent man” or “prudent investor.”

The new law is also silent on whether guardians may enter into investment agreements containing arbitration provisions. In Freeman v. Prudential Securities, decided in 1993, the Oklahoma Supreme Court affirmed an order denying a motion to compel arbitration in a dispute between a conservator and an investment company, but left open the issue of whether a guardian or conservator can enter contracts containing arbitration provisions that might limit the District Court’s jurisdiction.

Thursday, February 2, 2017

The Oklahoma Supreme Court holds that 20 OS 95.10 does not require judicial disqualification upon appellate reversal and remand. The statute is not allowed to usurp the courts' superintending control of judicial assignments.

Saturday, January 21, 2017

The Oklahoma Court of Civil Appeals recently held that a residence held by the deceased spouse's pre-marriage revocable living trust could become the surviving spouse's homestead, subject to her homestead rights under 84 O.S. 44. An attempted transfer of the homestead to a third party without the surviving spouse's consent or waiver would be invalid. But even if the surviving spouse held a homestead interest in the property, the deceased spouse's pre-marriage revocable living trust would not be treated as joint industry property and, therefore, would not be subject to the surviving spouse's forced share under 84 O.S. 44(B)(1), as it was amended in 1985. Estate of Eagleton, 2017 OK CIV APP 2, ___ P.3d ___ (mandate issued).

Saturday, November 26, 2016

HB3017 creates the Physician Orders for Life-Sustaining Treatment Act, codified at 63 O.S. 3105.1 et seq. This Act promotes use of a form, called the POLST form, which can be found, together with other information on this matter, at okpolst.com. The POLST form can be signed by a person otherwise holding authority to make end-of-life decisions, specifying the decisions regarding various issues including nutrition, hydration, and cardio-pulmonary resuscitation. It does not appear that this form would replace Advanced Directives, but would work together with such forms so that the medical providers can have a single form for reference regarding a particular patient. Keep in mind that the representative's authority to sign a POLST form must still be established. A guardian appointed under Title 30 would lack authority absent an express court order under 30 O.S. 3-119. A DPOA may be insufficient to establish authority, particularly absent express reference. The Act modifies 58 O.S. 1072.1(B)(1)(a), in a manner that may be unclear. The new language appears to create an exception to an exception, which would allow an attorney-in-fact under a DPOA to execute a POLST form if specifically authorized. (It is unclear from the statute's text how specific this authority needs to be.) Please note, however, the summary of the bill published by a widely used legislative tracking service appears to reach the opposite conclusion – that DPOAs cannot authorize execution of the POLST form. The practitioner should examine this statutory issue with care.

SB874 amends 58 O.S. 393 to raise the limit for small-estate affidavits, from $20,000.00 to $50,000.00. Great news for clients holding interests in small estates.

SB1495 revises 12 O.S. 2024 and 30 O.S. 3-110, to address the parties who may intervene or participate in Title 30 guardianship proceedings. This statute can be referenced as the “neice and nephew act.” Section 3-110 is amended to require notice to all adult children of any deceased brothers and sisters (in addition to existing provision requiring notice to brothers and sisters), when the prospective ward has no adult children or parents. The revision to Section 2024 is evenmore confusing. The revision creates a rebuttable presumption that a person entitled to notice of guardianship proceedings under 30 O.S. 3-110 have a right to intervene in the guardianship proceedings. It is unclear why this revision would have been needed, unless there are courts in Oklahoma who are refusing to allow participation by persons who are entitled to notice of the proceedings.

SB902 prohibits undocumented persons (non-citizens who are not legal residents or otherwise legally present in the United States) from serving as guardian, unless the court determines that there are no other qualified individuals available and that it is in the best interest of the prospective ward to appoint such a person, amending 30 O.S. 4-104, 4-105.

The Revised Uniform Fiduciary Access to Digital Assets Act was proposed as SB1107, but did not receive a hearing. The Act, as proposed, needed drafting work to conform with Oklahoma law on guardianships. This Act, which is widely supported around the country, should receive attention again in the next session.

Tuesday, September 20, 2016

In this decision, the Supreme Court found that the
challenging party did not establish a close or confidential relationship, nor
did she establish that the stronger person assisted in preparing the
deed. According to six of the nine justices, mere familial relationship
(grandmother and grandson) was insufficient to establish a close and
confidential relationship. Likewise, six of the nine justices found that
the grandson did not actively participate in preparation of the deed by “asking
about deeds at a courthouse, obtaining a copy of a deed at an office supply
store, and driving the grandmother to the abstract company where the deed was
filled out. While Richardson may have participated in the preparation of the
deed, she did not actively participate in the preparation.”
(emphasis in original).

In Oklahoma, fiduciary accountings are like state-court receiverships – easily compared to the wild, Wild West, due to the lack of promulgated rules governing the proceedings. The rules for fiduciary accountings in Oklahoma are few and far between.

The probate and guardianship codes provide for annual and final accounts to be submitted by fiduciaries. These statutes, however, fail adequately to define the form or even the contents of the required accountings. Many of these statutes were written in 1910. For the contents of these accountings, attorneys often look to common law, custom, and practice.

The Oklahoma Trust Code allows for judicial accountings of trusts, as part of the court’s authority to take jurisdiction over trusts. Oklahoma courts hold original jurisdiction to require accountings by trustees. In addition, to remedy a breach of trust, the court may order the trustee to render an account. But these statutes do not inform trustees or beneficiaries of the required contents or form of such accountings.

In the Blair Trust decision, issued on May 13, the Oklahoma Court of Civil Appeals noted that Oklahoma jurisprudence has not defined the term “fiduciary accounting” or identified the form or contents of such accountings. The trust instrument required the trustee to provide beneficiaries with “periodic reports of the administration,” but was silent as to the content or timing of these reports. A related partnership agreement required several specific types of reports. The court found that “these reports, along with other data, were produced.”

In Blair Trust, the plaintiffs argued that the court should adopt rules promulgated by the American Bar Association’s Committee on National Fiduciary Accounting Standards. The plaintiffs urged that these fiduciary accounting standards require “considerably more data and analysis than the reports and returns contained.” The Court of Civil Appeals found “no history of these standards being widely accepted or applied, and no indication that the Oklahoma Supreme Court would adopt them in this case.”

This decision leaves unanswered questions. The Blair Trust court refused to impose uniform standards for fiduciary accountings, instead suggesting that settlors of trusts should enjoy “freedom to tailor the duties of trustees,” by specifying the type of reporting that would be required in each instance.

As a result, trustees, beneficiaries, and courts will be required to address, on a case-by-case basis, the required contents of fiduciary accountings. This could lead to more court proceedings between trustees and beneficiaries.

For updates or more information...

About Me

Jim Milton is a shareholder with Hall Estill in Tulsa, Oklahoma, with more than 19 years of experience in the practice of law. Mr. Milton is a fellow in the American College of Trust and Estate Counsel (ACTEC). Mr. Milton is listed in the Best Lawyers in America in the areas of commercial litigation, municipal litigation, trust and estate litigation, and water law. Mr. Milton is listed in Oklahoma Super Lawyers in the area of estate and trust litigation.

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This Blog is made available by James C. Milton for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.